India Prepares New Export Incentives for Smartphone Industry

India Prepares New Export Incentives for Smartphone Industry

Why in News? 

India is developing a new, second-phase Production-Linked Incentive (PLI) scheme for the smartphone industry, focusing on rewarding companies for exports and increased local component sourcing.

Proposed Export Incentive Scheme for Smartphone Industry

• The Government of India is preparing a new export-linked incentive scheme for the smartphone sector as the existing Production Linked Incentive (PLI) scheme for mobile phones is set to expire on 31 March 2026.
• According to the proposed scheme, government subsidies will be linked to the volume of smartphones exported from India. Companies exporting higher quantities of devices will receive financial incentives or subsidies.
• The policy will also incentivize companies to increase the use of locally manufactured components, such as display modules, camera units, batteries, and printed circuit boards (PCBs).
• The government has reportedly conducted consultations with industry stakeholders through the Ministry of Electronics and Information Technology (MeitY) to finalise eligibility conditions, incentive rates, and implementation guidelines. 
• The new proposed export incentive scheme is expected to launch in April 2026.

Why India is Shifting to Export Incentives?

• Export Boom: India’s smartphone exports have grown rapidly, creating the need for an export-focused policy. Exports increased from $3.1 billion in FY2021 to about $24.1 billion by 2025, and smartphones have become India’s largest export category in 2025. Such strong growth requires incentives that reward global shipments.
• End of PLI Scheme: The existing Production Linked Incentive (PLI) scheme, worth about $21 billion, mainly supported domestic manufacturing expansion. As the scheme approaches its 2026 expiry, the government plans a second-phase incentive framework linked to exports and local component use.
• Global Supply Diversification: Major technology firms are pursuing a “China + 1 strategy” to diversify manufacturing locations due to geopolitical risks. As a result, companies such as Apple and Samsung are increasing production in India, with India now assembling around 25% of Apple’s global iPhone output. 
• Rising Export Concentration: A large share of India’s smartphone exports comes from a few firms. Apple alone exported about $23 billion worth of iPhones from India in 2025. A new incentive system aims to broaden participation of other manufacturers, making the export ecosystem more diversified and resilient.
• Long-Term Manufacturing Vision: The shift aligns with India’s strategic goal to expand electronics manufacturing to around $500 billion by 2030. Strengthening smartphone exports is critical because the sector already accounts for a major share of electronics exports and manufacturing growth.

Economic Significance of Proposed Policy 

• Industrial Expansion: The policy will strengthen the electronics manufacturing ecosystem. India’s mobile phone production has already risen from ₹18,000 crore in 2014–15 to about ₹5.45 lakh crore in 2024–25, showing massive industrial expansion. Export incentives will encourage firms to increase production capacity.
• Investment Attraction: A stable export incentive framework will attract greater foreign direct investment (FDI) into electronics manufacturing. Global firms such as Apple and Samsung suppliers are expanding their production bases in India. This policy will give investors predictability and long-term policy assurance.
• Employment Creation: Export-driven manufacturing will create large-scale employment opportunities in assembly plants, logistics, and component manufacturing. The electronics sector has already generated over 1.3 million jobs in the last five years, many of them for women and first-time workers. Future export expansion will further strengthen employment growth. 
• Regional Development: The policy will accelerate industrial growth in manufacturing clusters such as Tamil Nadu, Uttar Pradesh, and Karnataka. New smartphone factories and component plants will boost local infrastructure, skill development, and MSME participation, helping regional economies integrate with global manufacturing networks.
• Technology Upgradation: Export-oriented production will encourage companies to adopt advanced manufacturing technologies and automation systems. This will improve product quality, efficiency, and innovation within India’s electronics sector and help domestic firms move up the global value chain.